Identifier
Created
Classification
Origin
06CALCUTTA66
2006-02-14 12:20:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Kolkata
Cable title:  

MINERAL RICH JHARKHAND SUFFERS INSURGENCY AND POVERTY

Tags:  PGOV ECON ASEC EIND EMIN SOCI PHUM IN 
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RUEHCI/AMCONSUL CALCUTTA 0955
UNCLAS SECTION 01 OF 03 CALCUTTA 000066 

SIPDIS

SENSITIVE
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E.O. 12958: N/A
TAGS: PGOV ECON ASEC EIND EMIN SOCI PHUM IN
SUBJECT: MINERAL RICH JHARKHAND SUFFERS INSURGENCY AND POVERTY

REF: CALCUTTA 0006

UNCLAS SECTION 01 OF 03 CALCUTTA 000066

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV ECON ASEC EIND EMIN SOCI PHUM IN
SUBJECT: MINERAL RICH JHARKHAND SUFFERS INSURGENCY AND POVERTY

REF: CALCUTTA 0006


1. (SBU) February 5-8, CG visited the Eastern Indian state of
Jharkhand to assess the economic development, security,
religious freedom and the political situation. A new state,
established only in 2000, Jharkhand is still experiencing
serious growing pains. The National Democratic Alliance (NDA)
government is unable to respond to an increasing Maoist
insurgency and its efforts to promote investment by signing over
40 memorandums of understanding (MOUs) with various companies to
exploit the state's extensive mineral resources are unlikely to
see immediate results. The GOJ's lack of a compensation plan
for the many tribals, who are likely to be displaced by any
mining and manufacturing, is further antagonizing this already
alienated community which constitutes 28 percent of the state's
population. The weak NDA government under 37 year-old Chief
Minister (CM) Arjun Munda relies on 6 independent Members of the
Legislative Assembly (MLAs) who have received key ministerial
portfolios. Munda's effort to implement the Bharatiya Janata
Party's (BJP) pro-Hindu platform by proposing an Anti-Conversion
Law to discourage Christian missionary activity in the state is
exacerbating his tense relations with the Independent ministers
of the cabinet. One bright spot in this bleak picture is the
model industrial city of Jamshedpur, where Tata Steel, Tata
Motors and other manufactures have a large presence. U.S.
manufacturers Timken and Cummins and other companies are
experiencing excellent growth and predicting significant future
expansion in Jharkhand and throughout India.

--------------
Jharkhand, Spawn of Bihar
--------------


2. (U) In 2000, the Eastern state of Jharkhand was carved out
of India's poorest state, Bihar, as the Bihar government was
unresponsive the interests of its southern region. Sandwiched
between Bihar and India's second poorest state, Orissa,
Jharkhand has social statistics equally as dismal as its

neighbors. Of its approximately 27 million people, 44 percent
live below the poverty line. In rural areas, the figure is as
high as 58 percent. (Note: In comparison, Jharkhand's poverty
rates is more than double states like Maharashtra and Tamil
Nadu, with approximately 25 and 21 percent poverty
respectively.) Jharkhand's 30 tribal groups, which constitute
approximately 28 percent of the population, represent a
significant portion of the rural poor. However, Jharkhand has
great potential for economic development. The state possess 33
percent of India's coal reserves and 34 percent of its iron ore
and copper. As a result of its mineral riches, several
multi-nationals have proposed large investments in the state in
the past year. Mittal Steel signed an MOU of US $9.3 billion to
establish a 12 million ton per annum steel plant and Jindal
Steel has agreed to invest US $ 2 billion.

--------------
Maoist Threat
--------------


3. (SBU) Jharkhand may never see the benefits of future
investment if the growing Maoist insurgency is not addressed.
All contacts, whether business, NGO or political figures, agreed
that the Maoists constitute a serious threat to the state's
development. Of the state's 22 districts, approximately 17 have
a Maoist presence. Reportedly 550 people have died from Maoist
violence in the last five years. The highest insurgent activity
is in the rural areas on the border with Orissa, Bihar and
Chhattisgarh. Reflecting the lack of government focus and
response to the issue, the exact number of Maoist cadre is not
known but most contacts felt active members ranged from 500 to
1,000, with many more supporters, possibly a few thousand. In
districts along the border with Chhattisgarh and Orissa, the
Maoists have effectively created a shadow administration in the
remote villages. CG asked CM Munda and Chief Secretary M.K.
Mandal whether the GOJ had a plan to address the Maoist threat.
Neither could offer a specific response, other than to say that
more development was needed. Reflecting the continuing threat,
during the short period of CG's visit to Jharkhand, a railway
station in West Singhbum district was blown-up and area
commander of the Communist Party of India-Maoist (CPI-Maoist)
Surajbhan Kajal threatened to begin attacks in the state capital

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Ranchi.

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Tribal Dissatisfaction
--------------


4. (SBU) Complicating efforts to address the Maoist problem is
the growing disaffection of the sizeable tribal community in the
state. While the tribals represent a significant portion of the
population, their numbers have not resulted in economic or
political power. The tribals' lack of development has allowed
the Maoists to make inroads into their communities. Tribal
representative group Jharkhand Mukti Morcha (JMM) Secretary
Shailendra Bhattacharya told CG that the tribals are also afraid
that the large steel and mining MOUs will worsen their
situation. He said that much of the proposed mining would be in
tribal areas and cause serious displacement for the community.
In addition, the GOJ had no clear compensation plan.
Bhattacharya's views were echoed by BJP Rajya Sabha Member Ajay
Maroo and Tata Steel Deputy Managing Director A.N. Singh.
Bhattacharya said the tribals were not necessarily opposed to
development but felt that the GOJ, noted for corruption and
inefficiency, would not protect the tribals' interests. Rather,
JMM wanted to deal directly with the companies. Tata Steel's
A.N. Singh indicated the same reservations about working through
the state government and believed direct communications between
companies and tribals was best. (Note: Tata Steel is still
dealing with the fallout from last month's violence between
Orissa police and tribals in Kalinga Nagar (Reftel)).

--------------
Political Instability
--------------


5. (SBU) The NDA coalition ruling Jharkhand, while struggling
with serious social issues, also faces internal divisions. The
dominant BJP has just 30 seats in the 81-Member Legislative
Assembly and requires support from 6 Independent MLAs and 6
Janata Dal (United) members to retain power. Using their
leverage to extract key portfolios, the Independents hold the
Home Ministry, Rural Development and other lucrative positions.
Even with these perks, according to State Congress President
Pradeep Balmuchu and BJP member Maroo, the Independents are
wavering and only two need to pull out to bring down the
government. Like their state, the ministers are all very young
and relatively inexperienced. Home Minister Sudesh Mahato is 28
years old, the Rural Development Minister Anosh Ekka 32 and even
Chief Minister Munda is only 37. A former security guard, Munda
was a political non-entity until he left the JMM and joined the
BJP in 1999. Just four years later, he was selected by the BJP
to be CM in March 2003. Munda as an ethnic tribal was
considered a suitable public face for the BJP and sufficiently
malleable.


6. (SBU) Attempting to push the BJP's agenda in Jharkhand,
Munda proposed in December an Anti-Conversion Law to ostensibly
restrict forced religious conversions. However, the law is
widely understood to be directed against the activities of
Christian missionaries in the state. In his meeting with the
CM, CG expressed reservations about the intent of the proposed
Anti-Conversion Law. The CM gave a one word response, saying
that it was "politics." Leaving the CM's office, Principal
Secretary to CM U.K. Sangma said he was a Christian and did not

SIPDIS
believe that the GOJ would push the law forward. Rural
Development Minister Ekka, also a Christian, told CG that with a
constituency of 90 percent Christians, he would not support the
bill. The consensus of most contacts was that the bill would
not go forward as it would create a rift with Independents.
Munda had floated the idea for the bill on the orders of the BJP
national leadership but will not push it, to avoid a clash with
his coalition partners.

--------------
Economic Opportunity for US Business
--------------


7. (SBU) The model industrial town of Jamshedpur offered the
one bright spot in an otherwise bleak picture of poor
development and weak governance. Jamshedpur, founded by the

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Tata industrialist family in 1907, is home to a massive
industrial center, with steel factories, Tata Motor's truck
factory and a host of ancillary factories and industries. While
in Jamshedpur, CG visited Tata's facilities and two U.S.
companies: Tata Cummins and Timken. Tata Cummins is a joint
venture between Tata Motors and diesel engine manufacturer
Cummins of Indiana. Tata Cummins produces all the diesel
engines for Tata's truck, and commands a market share of around
70 percent in the commercial vehicles segment.


8. (SBU) Ohio-based Timken, originally in a joint venture with
Tata Steel but now independent, manufactures precision bearings
for railroads, large vehicles and industry. Its largest client
in India is the railroads. Tata Steel, Cummins and Timken all
described a situation of strong profits and significant
projected growth in Jamshedpur and throughout India. Tata
Motors had a 24 percent growth in profits in the last quarter.
Cummins currently produces approximately 69,000 Cummins B Series
engines a year. Under the agreement with Tata Motors, Cummins
will increase its total engine production to 100,000 units in
2008 and 120,000 units thereafter. Timken, with revenues of $57
million, expects to grow to $200 million through acquisitions
and product line expansion by 2008.

--------------
Comment
--------------


9. (SBU) Jharkhand still suffers the effects having once been
part of notoriously corrupt Bihar. Years of poor governance
have left the state with great poverty and weak leadership.
However, Jharkhand does offer excellent economic potential given
its great natural resources. Companies, like TATA, Cummins and
Timkin, that are already established in the state are doing
well. The NDA government will need to do more in combating the
Maoists, addressing the concerns of tribals and rural poor, and
implementing the MOUs for increased investment. Otherwise,
Jharkhand will remain mired in poverty and provide a base for an
increasingly bold Maoist insurgency in Eastern India.
JARDINE